The fiscal cliff: 2013's Y2K bug

Everybody is nervous about the fiscal cliff. And while going over it would not be fun, it may not be apocalyptic.

The opinions expressed in this commentary are solely those of Paul R. La Monica. Other than Time Warner, the parent of CNNMoney, and Abbott Laboratories, La Monica does not own positions in any individual stocks.

If you take a look at the performance of the broader market since Election Day, many stocks have already taken a tumble off of something resembling a steep overhanging face of rock. Too bad there isn't a two-word phrase to succinctly describe such a thing.

Yes, we all have the fiscal cliff on the brain. Wall Street is anxious. CEOs and labor leaders have headed to Washington to try and convince President Obama that the consequences of falling over the fiscal cliff would be dire. But is the fiscal cliff panic just a wee bit overdone?

You can be forgiven if you are suffering from fiscal cliff fatigue. The financial press is helping to ring the alarm bell. We're as guilty as everyone else. Consider this: The term "fiscal cliff" has been used 83 times this month in stories and videos by CNNMoney and our sister publication Fortune. I guess this is now number 84. Some experts are starting to compare the fiscal cliff fright-fest to the hyperbolic warnings about the Y2K computer bug back in 1999.

In case you forgot, there were many reputable economic and tech experts in the late 1990s who feared a chaotic meltdown once January 1, 2000 rolled around because lots of computers were supposed to be unable to figure out how to register a four-digit date. We were going to regress all the way back to 1900! You wouldn't be able to get money out of ATMs! Power grids would shut off!

That didn't exactly happen.

People should not glibly dismiss the fiscal cliff worries as another case of Chicken Little-ism though. Sure, the sky isn't falling right now. And it won't fall if Congress and the White House fail to reach a deal to avoid the cliff by the end of the year. Berkshire Hathaway's (BRKA)(BRKB) Warren Buffett told CNN's Poppy Harlow on Wednesday that the U.S. would not even slip into another recession next year if we fall over the cliff.

Consumers and business leaders have justifiable reasons to be worried about the fiscal cliff. John McAdam, chief executive officer of F5 Networks (FFIV), a Seattle-based maker of communications and tech security equipment, told me that the fears are real.

"There is no question that the customers I talk to are cautious about the fiscal cliff," he said.

But here's the thing. The fiscal cliff pales in comparison to the crisis that the world had to endure just a few short years ago.

McAdam said the worries among his customers are not nearly as pronounced now as they were after Lehman Brothers went bankrupt and the global credit markets went into a deep freeze. Back then, corporations were reluctant to do much of anything other than sit on their hands and pray that the worst would soon be over.

"This is not like 2009. Growth may slow but businesses are still spending," McAdam said, adding that it just seems natural for companies to be more wary about the economy now considering the events of the past few years.

With that in mind, stocks are likely to remain volatile until there is more clarity about what will happen with taxes and government spending next year. But the market may not have that much more room to fall. Blue chip stocks that are likely to weather any further economic turmoil may even be good buying opportunities soon.

"The dire outcome from falling over the fiscal cliff is unlikely to happen. We don't believe a major recession is coming," said Tim Hathaway, a portfolio manager with Brown Advisory in Baltimore. "But at what point will the fear of going over the cliff be priced into high quality companies? I think we're almost getting there."

We're still not there yet though. One reason that some are comparing the fiscal cliff to Y2K is that many experts believe there's no way the government will allow the automatic cuts and tax hikes to take effect. Somebody has to blink eventually. The political ramifications are too significant. Nobody wants to be accused of causing another economic downturn. Mid-term elections are now less than two years away. (Sigh.)

"I hope there is enough intelligence in Washington for lawmakers to realize that neither side wants to be seen as having their hands on the wheel if we go over the cliff," said Liz Ann Sonders, chief investment strategist with Charles Schwab in New York.

Nonetheless, Sonders said she is still slightly worried that it may take a so-called TARP moment to wake up Congress. That refers to the nearly 800-point drop in the Dow on September 29, 2008 when Congress voted against the bank bailout. You may recall that lawmakers quickly reconsidered.

Let's hope we don't get to that point. Even if going over the cliff doesn't lead to another recession, you can never underestimate the possibility of a Wall Street freak out when it doesn't get what it wants.

Paul R. La Monica is an assistant managing editor at CNNMoney. He is the author of the site's daily column, The Buzz, and also tweets throughout the day about the markets and economy @LaMonicaBuzz. La Monica also oversees the site's economic, markets and technology coverage.